Indian banks will need additional capital of $65 billion to meet all of global Basel III banking rules by March 2019, with state-run lenders accounting for 95 percent of the requirements, Fitch Ratings said on Tuesday.
That is far above the $11 billion in capital infusions into state-run lenders the government has budgeted through March 2019, with $3 billion due to be injected in the 2017-18 and 2018-19 fiscal years.
Fitch's latest estimate is lower than its previous call of $90 billion as weaker-than-expected loan growth reduced capital requirements, but the credit rating agency continued to warn that Indian lenders "have limited options to raise the capital they still require".
Stressed loans in Indian banks hit a record $150 billion at the end of December, with state-run lenders accounting for the bulk of it.
"State banks are unlikely to be freed from their current gridlock unless NPL (non-performing loan) resolution is accompanied by additional capital," Fitch said in its statement.
It added that capital requirements at Indian state-run lenders remained hefty due to several factors, including low common equity ratios and provisioning requirements for new loans.